One of the most recent mantras in the financial media is that housing prices rise because there is an inventory shortage. While it is an excellent headline for “getting clicks,” there are 3-reasons why there really is NO housing shortage.Conclusion
As we head into 2021, potentially higher rates and continued economic weakness could collide with elevated housing prices in some areas. Such will result in the rapid reversion of “housing activity” and a surge in “supply.”
No Housing Shortage, 3-Reasons Why There Really Is No Housing Shortage
The next time you hear someone in the media saying the housing market will never go down again because of an “inventory shortage,” it may be worth questioning their view.
As with all data, it is crucial to understand the data’s calculation to derive its real meaning. The problem with most analysis by the media is they tend to extrapolate a current data point into an infinite future.
Reality rarely works that way.